B
y mid‑2025, Texas’s housing market is under strain. The spring buying season has stalled, with sales falling after a sluggish first quarter and continuing to dip in the second. Affordability pressures, rising mortgage rates, and global trade tensions have dampened demand, while uncertainty over future rate cuts—fueled by political pressure for the Fed to act—has made many buyers wait for lower rates later in the year.

    Inventory has surged to a 14‑year high, the largest build‑up since 2011 when foreclosures were rampant. This excess supply has widened the supply‑demand gap, causing homes to linger on the market and prompting sellers to slash prices at record levels. In major metros, price growth has stalled as inventory mounts.

    Despite the slowdown, some buyers are capitalizing on the abundant listings. Cash buyers, who are not tied to financing costs, can negotiate aggressively, and financially strong buyers, though wary of high rates, remain active. Builders are gaining traction by offering rate buydowns and reduced closing costs, keeping sales steady and clearing inventory faster than the resale market. New‑home sales are gaining share as higher rates curb resale activity, and the influx of smaller, more affordable new builds improves price competitiveness for lower‑income buyers.

    Looking ahead, new‑home sales are projected to outpace resales in the second half of the year, thanks to builder incentives. July and August job reports show a slowdown in the U.S. labor market, with significant downward revisions to earlier employment figures. Amid concerns of an economic slowdown, the Fed signaled a willingness to adopt an accommodative stance in August. Mortgage rates have since fallen sharply from the spring peak of 7 %, following the Fed’s 25‑basis‑point policy cut announced on September 17. Lower borrowing costs should revive buyer interest and pent‑up demand.

    With inventory still elevated after a challenging spring, the shifting landscape presents opportunities for both buyers and sellers. The market’s current dynamics—high inventory, falling rates, and builder incentives—create a window for strategic transactions.

    — Yanling Mayer, Ph.D., research economist, Texas Real Estate Research Center (source: Texas REALTORS® data)